Ms Jasmina Behan:

I echo the comments of my colleagues from the Department of Social Protection. The 34% figure has a long history, with the ESRI first calculating that the rate should range between 24% to 34% of the gross average industrial earnings. That view was also endorsed by the national pensions policy initiative in 1998. The benchmarking and indexation group in 2001 was divided on the view but a majority indicated a figure of 27% of gross average industrial earnings, with a minority favouring a 30% figure. The national pensions review board continued to recommend the social welfare and pensions figure of 34% of gross average industrial earnings. The roadmap for pensions reform 2018-2023 also put that forward. The 34% figure is the benchmark at which the rate is initially set but once it is locked, it is about the movement, as it is linked with earnings as always being 34%. It matters at the start what is the figure but it just moves together. The key issue is that once the rate is set, we are basically ensuring if we go with the parameter that the pension moves at the same pace as wages.

To echo previous comments, the complexity in looking at all welfare payments arises because there is a multiplicity of payments. The first question is whether all or some payments will be considered; if only some are to be considered, we need to figure out how the process interacts with the rest of the payments. Another question is what parameter is to be used, and whether it is to be prices, wages, a double lock or other approaches. There is a cost implication of various options that must also be considered. There is also the consideration of how these changes in policy will affect the labour market, incentives to work, replacement rates and so on. There is much complexity that must be considered when looking at indexation and benchmarking of all welfare payments.